Making rich people pay

The 'deep pockets theory of justice' states that when there is a social cost, the person who should pay is the person who's got money. According to that theory, assigning legal liability is easy - you just look around and pin the liability on the guy who has the most wealth. As for justice and fairness, the deep pockets theory states that if the guy can afford it, then it's fair and just to make him pay.

​The trouble with the deep pockets theory of justice is that it seems to lack any concept of individual liberty and autonomy. A net gain to society as a whole can be achieved by assigning liability according to ability to pay, but it cannot be justified in a manner consistent with respect for the individual. This is a problem: the 'public good' does not include only the weak and the vulnerable, who stand to benefit from the deep pockets theory; it includes all of us, rich and poor, privileged and marginalised.

We must justify any statements about the collective interest solely by how it advances the individual welfare of each and every citizen, be he friend or foe, popular or despised. So understood, their happiness, their pains, their successes, and their emotions matter; what is irrelevant, and dangerous, is some distant conception of the public good that is not anchored to the utility of any human being and that disregards the separateness of persons.

R.A. Epstein, Principles for a free society, p. 4

​Any theory of justice that makes it easier to protect the weak and vulnerable has good arguments to commend it. It is also fairly uncontroversial to state that a theory of justice must pay attention to incursions on individual liberty. But in the public debates about economic inequality there seems to be one exception to the principled approach, and that concerns rich people. 

A recent Global Attitudes Project asked people to identify the greatest danger to the world and they all said 'inequality'. Of course they did. You thought it would be nuclear weapons or North Korea or Donald Trump or something like that, didn't you. No, inequality is the priority problem today, at least measured by how infuriated people are about it.

The obvious solution in resolving this problem is to make rich people share. Then people will at least have equal amounts of stuff. Making rich people pay should be quite easy, since much effort is expended on discovering how much they earn and where they stash their money.

Redistributing Income

A good example of redistributive policy proposals may be taken from Anthony Atkinson. Atkinson's 'Bringing Income Distribution in from the Cold' took issue with the extent to which economists engage with distributive questions. As he wrote in his book Inequality: 'Distributional issues are not of central interest to economists. Indeed some economists hold the view that the economics profession should not concern itself at all with inequality.' Reason being, that they think there are more important things to study. For instance, Robert Lucas writes: 

Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution...The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.
​

​Improving the lives of the poor? Increasing production? The problem with that approach is that it sure takes a lot of time to increase productivity, and people might be forgiven for supposing that if there's an economic pie to be shared out then the urgent priority must be how to divide up that pie.  If the kids are standing around, hungry, waiting for their share of the pie and threatening to riot, should we focus on dividing that pie in equal slices as quickly as possible and feeding the kids fairly so they don't start fighting over who got the biggest piece, or should we start investigating ways to increase the size of the pie? Since we know that people tend to riot when they are forced to tolerate living in a society that has other people who are richer than them, the obvious priority preference is to keep the peace by redistributing everything as speedily as possible.

Atkinson did succeed in bringing income distribution in from the cold. In his book, Inequality, he has some hefty policy suggestions.

First, he suggests that we should tackle poverty. Alas, the problem here is that most of the people who are actually concerned about poverty are taking the long view and trying to understand the bigger picture, so they are not interested in playing childish redistribution games - they are interested in increasing productivity.

Second, Atkinson says something about the role of technology, artificial intelligence, robots replacing human workers, etc, but again that all requires a longer term focus on productivity rather than messing about with redistribution exercises.

Third, Atkinson suggests that we should tackle unemployment. His evidence shows that when people are in work, earning a wage, inequality is reduced. The higher the rate of unemployment, the more inequality in society. So he thinks we should recognize how the nature of employment is changing and develop targets for getting people into work. In fact, the law is far too concerned with ensuring that industrialists treat everybody fairly to be bothered about how to reduce unemployment. Take for example all the legal measures being rolled out to restrain firms like Uber from describing workers as 'partners' instead of treating them as dependent employees: are those legal responses designed to reduce unemployment? Of course not. It's more about making employment more comfortable for those who are in work.

Lastly, Atkinson has some proposals about social security, expanding the scope of welfare support, progressive taxation and global taxation to stop rich people from hiding their wealth offshore. These proposals seem much more likely to garner support, because they are based on wealth redistribution and making rich people pay, which is the whole point. As long as we're going down that road, how about bypassing the whole social security and taxation bureaucratic processes by just turning up at the tax haven with a couple of policemen and getting the money straight out of the bank? That would be easier and would get us to the same result as ramping up taxes, but much quicker.

Tax havens

If you’re a banker, you should be very afraid because the Great Eye is upon you and there's nowhere to hide. Oxfam has revealed that rich people are hiding $7.9 trillion in their tax havens. We obviously want that $7.9 trillion. Presumably Oxfam can point out the relevant banks, and the government can send a couple of policemen there (maybe they could be armed, as people tend not to argue with armed policemen) and just get the banks to give up the money. With $7.9 trillion we could easily fix the problem of income inequality by distributing that cash to the poor. Problem solved. 

Some people like to spend a lot of time arguing about whether redistribution through taxes is the same as stealing. Of course it's not. Here's a way to distinguish between them: redistribution is done by governments for the public good, while theft is done by the feckless and the immoral for their private gain. Taking money from rich people by force looks like an actual good thing to do given the deep pockets theory described above, coupled with the widespread assumption that rich people as a whole (the identikit and homogeneous 'rich-people community') must have done something very wrong (cheating, exploitation, greed, lacking a social conscience, etc) to have become that rich.